The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
Kohl’s Corp. soared after it reported a surprise profit and reduced its stockpile of merchandise in the first quarter — early signs that the new chief executive officer is bolstering performance.
Chief executive officer Tom Kingsbury, who assumed the role in February, said in a statement that Kohl’s is “making progress against each of our key 2023 priorities.” He pointed to inventory management and expense discipline.
The shares rose as much as 19 percent on Wednesday in New York trading, the most in four months. Through Tuesday’s close, the stock had dropped 24 percent in 2023.
Earnings per share of 13 cents in the quarter ended April 29 beat analyst expectations for a 40-cent-per-share loss. Gross margin of 39 percent in the first quarter surpassed estimates of 36.9 percent. Inventories, meanwhile, declined 6 percent, reversing the 4 percent growth in the previous quarter.
ADVERTISEMENT
Walmart Inc., Target Corp. and Home Depot Inc. have pointed to weaker consumer spending in the first three months of the year — particularly in discretionary categories such as apparel and home goods. Those are key areas for Kohl’s, and a decline in same-store sales in the first quarter showed its also being hit by that trend.
Comparable sales fell 4.3 percent, deeper than the 3.9 percent average decline expected by analysts. It’s the fifth consecutive same-store sales drop for Kohl’s, showing the retailer still has work to do to win back shoppers.
Investors, however, appear to look past the macroeconomic weakness and focus on management’s steps to stabilise the business after a buildup of inventory had forced Kohl’s into margin-busting markdowns in previous quarters.
“Having a disciplined approach to inventory is key for many reasons,” Kingsbury said on a call with analysts. “We are happy with the progress we’ve made from January to now, and we could be better than that by the end of the second quarter.”
By Olivia Rockeman
Learn more:
Why Activist Investors Are Targeting Department Stores
Hedge funds are urging Kohl’s and Macy’s to consider radical changes to how they operate as the retailers struggle to reverse decades of decline.
The rental platform saw its stock soar last week after predicting it would hit a key profitability metric this year. A new marketing push and more robust inventory are the key to unlocking elusive growth, CEO Jenn Hyman tells BoF.
Nordstrom, Tod’s and L’Occitane are all pushing for privatisation. Ultimately, their fate will not be determined by whether they are under the scrutiny of public investors.
The company is in talks with potential investors after filing for insolvency in Europe and closing its US stores. Insiders say efforts to restore the brand to its 1980s heyday clashed with its owners’ desire to quickly juice sales in order to attract a buyer.
The humble trainer, once the reserve of football fans, Britpop kids and the odd skateboarder, has become as ubiquitous as battered Converse All Stars in the 00s indie sleaze years.